1. Field of the Invention
The invention relates to data processing systems and applications therof. More specifically, the invention relates to business practice and management and especially to finance, such as securities. Methods and systems are disclosed for the creation and management of predenominated negotiable drafts that, while unredeemed, provide investment-supporting capability to an owner of record.
2. Description of the Prior Art
Banks manage customer funds in various types of accounts, including traditional checking accounts in which the customer is entitled to write checks in amounts of the customer's selection and the bank determines at the time the check is presented for payment whether the check will be honored, which is a funtion of whether the customer has adequate credit or money on deposit with the bank. Accordingly, the term "check" is often understood to refer to a written order, usually on a standard printed form, directing a bank to pay money, in which the order is prepared by the bank customer or account holder. Because of the informality with which checks can be written, checks are considered to be short-term instruments, often being limited in negotiable life to six months, by custom or law.
Banks, express companies, and the like also provide drafts, which differ from checks in that a draft is drawn against the bank's own funds. Accordingly, a much higher degree of reliability surrounds a bank draft, as it is assured that the draft will be honored when presented and that sufficient funds are held for payment.
In order to provide to customers a more flexible credit arrangement, banks provide letters of credit, indicating the bank's willingness to pay upon demand a certain upper limit of funds on behalf of a customer.
Banks also provide "traveler's checks," which are pre-denominated drafts against the bank's funds, often requiring the purchaser's signature or duplicate signature in order to make the draft properly negotiable. Therefore, traveler's checks are very similar to bank drafts in that the bank has received the funds to support payment of the checks at the time the checks are issued to a customer. Such drafts provide a high degree of reliability and security to all holders, as they can be replaced if lost by the original purchaser, they do not become stale if held for long periods of time, and they are supported by the funds held by an institution that is charged with knowledge of their face value and outstanding amount.
Banking and securities institutions have created composite customer accounts in which the customer's funds are maintained in interest-earning accounts against which the customer's checks may be drawn. Further developments of this type of account have permitted customer funds to be invested in actual securities such as pooled income trusts. U.S. Pat. No. 4,346,442 to Musmanno discloses a system in which a customer's funds are held in a securities brokerage account for investment in a variety of securities, including money market accounts. The Musmanno system permits the customer to draw against the account by use of normal checks and charge cards, with the management system ordering the liquidation of the account in a preferred manner in order to satisfy transaction or check charges. Similarly, the management system orders the investment of incoming revenues in a preferred manner and monitors the customer's credit limit. Such a composite account offers improved management of funds with a potentially greater ready line-of-credit to the customer than would be available if the customer were to isolate bank functions from securities-brokerage functions.
The present invention offers a system of financial management in which the account holder's funds are placed in bi-media investments, including both a revenue producing investment and a non-revenue producing, negotiable draft type of investment, such that the customer's portfolio is substantially entirely invested in each of the two investment forms, as more fully explained in the following detailed description. To achieve the foregoing and other objects and in accordance with the purpose of the present invention, as embodied and broadly described herein, the system and method of account management of this invention may comprise the following.